Boston institution lets customers call the shots on charity

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A new Boston Internet bank is planning a novel approach to attracting customers: Instead of spending millions on traditional advertising or promotions, it plans to give customers cash to donate to their favorite charities.

AbleBanking, a division of Northeast Bancorp. of Lewiston, Maine, is offering $25 to new customers, plus $2.50 a year for every $1,000 they keep in their accounts, to give to any qualified charity. The bank hopes to begin taking deposits by early next year.

“We’re giving you this instead of a toaster,’’ said Heather Campion, Northeast Bancorp’s chief administrative officer, formerly an executive at Citizens Bank.

Of course, charitable giving is nothing new in banking. Bank of America, one of the nation’s largest banks, gave more than $200 million to nonprofits last year, including $12 million in Massachusetts. Some community banks are even more generous, relative to their size.

But ableBanking, headquartered on Boylston Street, is one of a growing number of institutions that are leaving it to customers to decide where to send the money.

For instance, Capital One Financial Corp., based in McLean, Va., launched a website in 2008 to let credit and debit card customers donate their rewards points or cash to charities, without paying transaction fees. SunTrust Banks Inc., of Atlanta, offered a promotion four years ago to give new checking customers either $50 in cash or $100 to a qualified charity.

“I think we’re seeing more and more of this because brands of all kinds realize that it’s wise to align with the causes their customers like,’’ said Katya Andresen, chief strategy officer at Network for Good, a company that processes charitable donations. “It gives your brand a halo effect when it is harder and harder to break through the clutter.’’

Northeast Bancorp, with $600 million in assets and 10 branches in Maine, is launching ableBanking to boost deposits and increase the money it has available to lend, invest, and buy commercial real estate loans from other financial companies.

AbleBanking plans to offer interest rates on deposits similar to those at some other Internet banks, which typically pay more than traditional banks because they don’t have the expense of operating physical branches.

AbleBanking faces stiff competition, however. There are more than 90 pure Internet banks or traditional banks with cyber branches where customers can open accounts, apply for loans, transfer funds, and make other types of electronic transactions, according to SNL Financial, a financial data provider in Charlottesville, Va. Several of them, including Ally Bank and Capital One, are spending millions of dollars on advertising.

“It’s definitely an area of growth,’’ said an SNL analyst, Patrick Sims. “A lot of banks are looking at various online strategies.’’

AbleBanking executives are betting their commitment to charity will help it stand out. While many major banks, such as Bank of America, give about 0.02 percent of their deposits to charity each year, ableBanking plans to give 0.25 percent, more than 12 times as much.

“We’ll be one of the most charitable banks or companies in the country,’’ said Rick Wayne, chief executive of Northeast Bancorp.

Not every online bank has been successful. One of ableBanking’s founders, Claire Bean, was involved with an Internet bank that foundered a decade ago. Lighthouse Bank, wound up costing its corporate parent, Brookline Bank, more than $10 million in losses from 2000 to 2001. But today’s customers are more willing to bank online, Bean said.

“I really think it was a bit before its time, in terms of consumers’ willingness to bank online without bricks and mortar,’’ said Bean, chief operating officer for Northeast Bancorp. “The world has changed so much since then.’’